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Copper & Oil Fall as Fed Shows Pessimism About US Economy

September 22, 2011 at 5:25 by Vladimir Vyun

The US Federal Reserve held the key interest rate unchanged at the record low level and spoke in monetary policy statement about potential future hardships that the US economy may face. Commodities, including copper and oil, reacted negatively to the dovish statement.

The Fed left the federal funds rate near zero and announced the plan to buy $400 billion of long-term securities. The central bank said “there are significant downside risks to the economic outlook”.

The Standard & Poor’s 500 Index slumped 2.9 percent, while the Standard & Poor’s GSCI Index dropped 1.6 percent to 628.17, the lowest intra-day level since August 19. The MSCI Asia Pacific Index tumbled as much as 3.2 percent.

The contract for delivery of copper in three months dropped 3.2 percent to $8,036.25 per metric ton on LME, the lowest price since November 17. November futures for delivery of crude oil slid $1.77 to $84.15 per barrel in electronic trading on NYMEX.

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